Kardonick v. JP Morgan Chase & Co. et al
Filing
426
RESPONSE in Opposition re 406 MOTION for Bond Plaintiffs' Motion to Direct Objectors to Post Appeal Bond filed by Tom Blanchard. (Sweeney, Patrick)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
------------------------------------------------------x
DAVID KARDONICK, JOHN DAVID,
and MICHAEL CLEMINS, individually
and on behalf of all others similarly
situated,
Plaintiffs,
v.
JPMORGAN CHASE & CO. and
CHASE BANK USA, N.A.,
C.A. No. 1-10-cv-23235-WMH
Defendants.
------------------------------------------------------x
OPPOSITION OF OBJECTOR THOMAS BLANCHARD TO PLAINTIFFS’
MOTION TO DIRECT OBJECTORS TO POST APPEAL BOND
Introduction
On October 26, 2011, Plaintiffs filed a motion to direct appealing objectors to post an
appellate bond on the grounds that the appeals are frivolous, and that there is a strong
likelihood that they will not recover their costs after successfully defending an appeal. These
statements are undermined by their own pleadings.
To begin with, Plaintiffs state on page two that “it is anticipated that each appeal will
raise the exact same arguments considered and rejected by this Court.” Mtn. at 2. This, of
course, is legally necessary as arguments not raised at the trial court level cannot be raised on
appeal. Rather than undermining Appellants’ anticipated briefs, Plaintiffs merely state the
obvious: that Appellants will be raising those issues the Trial Court has already considered
and overruled.
Second, the Trial Court summarily overruled the objections in the final judgment in
paragraph 12, stating that it had “considered” the objections, and decided to “overrule” them.
1
This does not mean that the objections were meritless, as contended by Plaintiffs on page 2.
Rather, objector voiced concern (INTER ALIA) over the amount of fees requested being
unfair in that the percentage of the settlement amount was too high. Interestingly, while the
Court technically overruled all objections, the Court did reduce Plaintiffs’ requested fee
award from $5 million to $3.5 million. Thus, Blanchard’s objection regarding attorneys’ fees
was at least in some way a consideration in this Court’s decision. This fact is in direction
contravention to Plaintiffs’ contention that the objectors’ arguments are meritless.
Third, Plaintiffs assert that an appellate bond is necessary for risk of nonpayment, and
then tethers this argument to the fact that the objectors are represented by “professional
objector” counsel. This argument is inherently contradictory. If most of the objectors are
represented by attorneys who regularly practice in this arena, then the likelihood of
nonpayment of costs is in fact significantly reduced. These are established attorneys with
established practices, who do have the means to meet cost bills when appropriate. It seems
that the true risk of nonpayment would rest with an unrepresented objector. Accordingly, this
basis for imposing a bond upon the “professional” objectors, rather than being tied to a
reasonable ground such as risk of nonpayment, is instead tied to a punitive purpose:
punishment for objecting at all. This is improper and is not a basis upon which an appellate
bond can be imposed.
I.
THE RISK OF NONPAYMENT IS DE MINIMUS, GIVEN THE STATUS
OF THE REPRESENTED OBJECTORS, AND THE ACTUAL
REIMBURSABLE COSTS TO BE INCURRED
Plaintiffs cite to Rule 7 of the Federal Rules of Appellate Procedure, which permits,
but does not mandate, the Trial Court to impose an appellate bond. A Court may elect to
“require an appellant to file a bond or provide other security in any form and amount
necessary to ensure payment of costs on appeal.” Mtn. at 4. The plain language of this Rule
states that its purpose is “to ensure that the appellee will be paid any costs that are awarded to
him if the appellant is unsuccessful on appeal.”
2
“The main purpose of an appeal bond ‘is to protect an appellee against the risk of
nonpayment by an unsuccessful appellant.’” In re Initial Public Offering Sec. Litig., 728
F.Supp.2d 289, 292 (S.D.N.Y. 2010). A district court may not impose a bond in an amount
beyond what is necessary to ensure adequate security if to do so would effectively preclude
pursuit of an appeal. (Lindsey v. Normet, 405 U.S. 56, 77-79 (1972)(a statute conditioning
appeal on posting of double bond was unconstitutional under Fourteenth Amendment equal
protection clause). Nor may a bond be imposed for the purpose of discouraging exercise of
the right to appeal. Clark v. Universal Builders, 501 F.2d 324, 341 (7th Cir. 1974). In a
recent case in the Ninth Circuit, a bond request for $7,500 in a case with three appellants was
reduced to $3,000, which more reasonably represented the actual anticipated reproduction
and fee costs. (See, Hartless v. Clorox, 06-cv-02705-CAB, Docket No. 131)
Plaintiffs’ motion emphasizes that six of the nine appellants are represented by
“professional objectors.” Mtn. at 9. Plaintiffs fail to state that these represented objectors
cannot or will not pay their cost bill in the event that their appeal is unsuccessful. In fact,
instead of providing legal authority to explain why the objectors’ counselors’ identities are
even relevant, Plaintiffs blithely state that professional objectors delay distribution of
settlements. Mtn. at 9. If the purpose of the appeal bond is to ensure payment of
reimbursable costs, as Plaintiffs contend, then the fact that the majority of the objectors are
represented undermines their argument that a bond is necessary. This cost bond request
smacks of an effort to deter the appellants from pursuing their appeals. This is a patently
improper purpose. Accordingly, Plaintiffs have failed to meet their burden to show that an
appellate bond is necessary.
Second, Plaintiffs request an omnibus $35,000, from a group of nine appellants. This
amount far surpasses any printing and reproduction costs they would incur in reproducing the
record in this very short case; including only the complaint, amended complaint, motion to
dismiss. Ironically, with this dearth of pleadings, the only real cost incurred in reproduction
3
would be the opt-outs and objections. A more realistic estimate of the total costs includes:
the $455 filing fee (which Plaintiffs do not have to pay), reproduction of the short record, and
multiple copies of briefs. It is unlikely the reproduction and copying will exceed $2,000 in
total, let alone approach $35,000.
II.
THE MERITS OF THE APPEAL HAVE ALREADY BEEN PROVED
IN THE COURT’S FINAL ORDER
Another factor to be weighed in whether to impose an appeal bond are the merits of
the appeal. Mtn. at 6, citing In re Initial Public Offering Sec. Litig., 728 F.Supp.2d 289, 292
(S.D.N.Y. 2010). As stated above, the Court summarily overruled all objections filed in
response to the settlement, in paragraph 13 of the Final Order. The attorneys’ fees order,
however, was reduced by $1.5 million. Without further clarification from the Court, this
Appellant is left to assume that the Court considered her objection to the amount of attorneys’
fees, and reduced it accordingly. This gives an imprimatur of merit to Blanchard’s
objections.
The reduction in attorneys’ fees, after Blanchard filed an objection to them, is also
evidence of the absence of bad faith, or vexatiousness, the final factor to be considered when
a Court considers imposition of an appeal bond.
III.
IF THE APPEAL IS TRULY FRIVOLOUS, THE COURT OF
APPEALS IS IN THE BEST POSITION TO MAKE THAT
DETERMINATION, AFTER CONSIDERATION OF THE BRIEFS
While the District Court is in the best position to consider the evidence and arguments
presented for its consideration, the same cannot be said about the appeal. While the core
issues being appealed remain the same, the appellate briefs have not been written, and an
assumption of frivolity is premature and best saved for determination after submission. One
case perfectly illustrates this point:
“The question of whether, or how, to deter frivolous appeals is best left to the courts
of appeals, which may dispose of the appeal at the outset through a screening process,
grant an appellee’s motion to dismiss, or impose sanctions including attorneys’ fees
under Rule 38. [Citation.] Allowing district courts to impose high Rule 7 bonds on
where the appeals might be found frivolous risks “impermissibly encumbering”
4
appellants’ right to appeal and “effectively preempting this court’s prerogative” to
make its own frivolousness determination.” (In re Am. President Lines, 779 F.2d 714,
717-18 (D.C.Cir. 1985.) Azizian v. Federated Dept. Stores, Inc., 499 F.3d 950, 961
(9th Cir. 2007)(emphasis in original).
Accordingly, Appellants respectfully request that the Court reserve judgment regarding
the merits of the pending appeals and reserve this decision for the Court of Appeals after the
submission of the briefs. Appellees will not be without redress, as sanctions and/or costs can
be imposed at that level if appropriate.
IV.
CONCLUSION
Blanchard’s appeal is, and will be, supported by appropriate authority. The simple
fact that one of his seventeen objection points (attorneys’ fees amount) was apparently
considered and approved by the Court gives the stamp of credence to her appeal. This
negates the “frivolous” and “bad faith” elements the Court may consider when determining
whether to grant a request for an appeal bond. Further, the fact that several objectors are
represented by attorneys gives support to the fact that any cost bills levied would be paid by
these “professional” counsel, regardless of what state they may hail from. Without meeting
these criteria, there is simply no basis for the imposition of a bond at all.
If the Court determines that some bond should be posted, Blanchard’s requests that
the Court adjust the request downward, to an amount which more reasonably approximates
what the true “costs” would approach, an amount which would surely be less than $4-5,000,
in total. Perhaps a reasonable approach would be not to make the bond joint and several, as
there are several appellants, but individual, in the suggested amount of $1,000 each, if
necessary.
Dated: November 10, 2011
Respectfully submitted,
___/s/ Patrick S. Sweeney__
Patrick Sweeney (Florida Bar #593486)
Sweeney & Sweeney, S.C.
440 Science Drive, Ste. 101
Madison, WI 53711
Phone: 608-238-4444
Fax: 608-238-8262
5
Email: patrick@sweenlaw.com
Jeff M. Brown (Florida Bar #197912)
LaValle Brown & Ronan, PA
750 South Dixie Highway
Boca Raton, FL 33432
Phone: (561) 395-0000
Fax: (800) 795-0995
Email: Jbrown@LavalleBrown.com
Attorneys for Objector Thomas Blanchard
CERTIFICATE OF SERVICE
I hereby certify that on November 10, 2011, I electronically filed the foregoing with
the Clerk of the Court of the United States District Court for the Southern District of Florida
by using the USDC CM/ECF system.
I certify that all participants in the case are registered CM/ECF users and that service
will be accomplished by the USDC CM/ECF system.
___/s/ Patrick S. Sweeney____
Patrick S. Sweeney (Florida Bar #593486)
Attorney for Objector Thomas Blanchard
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?